Re: DUCs, Rigs, and Frac Spreads (Argus Media article)
I can only speak to Canada in broad terms, but it will be difficult for most fraccers to scale up. Most operators who survived did so by slashing capex and cannibalizing their frac spreads. Any I've reviewed were well, well below 50% utilisation last year and are still at 50% now (at best). But this is a false statistic in that their capacity is hypothetical. They so cannibalize that much of what they say is unused capacity no longer exists. It's beyond cold stacked. Calfrac is a great example.
The exception is Trican. For whatever prescient reason, in 2016, at the height of theb last cyclical peak for oil and NG darling, they decided they needed to wipe out their $700m debt. And that's what they did while cash flow was high and assets sold for something that had relevance to book value. So, when the chasms of hell opened last year, they were almost done (went debt free Q4'20) with most of their large international assets gone but the dominant fraccer by manned plus warm-stacked (which they continued to maintain) horsepower. A quarter back (not sure today), they had 250,000 h.p. in the field with another 260,000 warm-stacked (6 spreads?) of which one, I believe, they were reactivating. Can you imagine the potential operational leverage to AECO and Station 2 NG prices over $3/mcf with inter-AB demand taking off with 1.5 bcf/d coal to NG power conversions going one after the other? Nevermind cagey operators like Tourmaline selling direct to Asia through a tolling arrangement with Cheniere for an incremental 140 mmcf/d (as a start, how many 'me toos' are comjng) to expedite Canada LNG pricing feed through. This all takes incremental fraccing capacity to satisfy.
Who ya gonna call????
Regards,
Naamkat